Fair Credit Reporting Act and Employment Background Checks (Disclosure and Consent)

Preliminarily Approved $6.8 million Settlement Due to Small Error on Disclosure Form

The Fair Credit Reporting Act applies not only to credit reports, but to employment background checks as well. As we have seen from recent class action filing trends, this is proving to be an area for employers that is worthy greater clarity and focus.

To accommodate this, over the course of the next few weeks we will look more closely at how employers can successfully navigate each of the critical components of this potential litigation minefield.

This article will focus specifically on one critical step in the background screening process: FCRA compliant background check consent and Authorization.

Earlier this year, Publix Super Markets Inc. was confronted with a class action lawsuit resulting in the preliminary approval of a $6.8 million settlement due to the wording used on their pre-employment background report authorization and consent form. To be precise, Publix Super Markets Inc. made the mistake of including a statement of waiver of liability on said form. According to the FCRA, consent and authorization forms MUST include “stand alone” disclosure.

The phrase “stand alone” demands that the form ensure applicants are aware of the employer’s intention to procure a background check, and that clear and conspicuous disclosure of this fact must be made in writing in a document that consists solely of this disclosure to the applicant/employee before a report is procured or ordered to be procured.

So what does this mean? Consent and Authorization forms used for pre-employment or continued employment background screening may ONLY consist of a statement of intention to procure a background check, and an authorization section for the applicant/employee to authorize this procedure.

Absolutely no extraneous information (such as purported release of liability, statement of ineligibility for employment if no consent is given, etc.) may be included on the form.

It is a safe assumption that full compliance with FCRA rules and regulations is no easy task, as disclosure wording is not the only potentially problematic detail in the statute. The important steps in ensuring compliance with the FCRA as it relates to consent and authorization are as follows:

1. Disclosure should be clear and in writing in a document that consists of the disclosure only.
2. Disclosure should NOT be a part of a printed employment application, but may include a blanket disclosure permitting consumer reports for the duration of employment.
3. Authorization must be obtained before procuring or ordering a consumer report, and may be included with the disclosure document, and may include a blanket authorization covering the duration of employment.
4. There are NO prohibitions by the FCRA from an employer taking adverse action against an applicant who refuses to provide background check authorization.

One option being recommended to employers and HR managers to remain compliant is to simply separate the consent and authorization forms all together, and have completely separate documentation diverting all extraneous information or notification to a different consent form.

The best and most effective approach to avoiding a costly lawsuit remains consulting competent, experienced legal counsel on each aspect of FCRA Compliance before conducting background checks.

Lebowitz, Todd. “Publix to Pay $6.8 Million Settlement over Noncompliant Background Check Forms.” Lexology. 3 Nov. 2014. Web. 7 Nov. 2014.

Jodka, Sara. “The FCRA Is the New FLSA.” Employer Law Report. Porter Wright Morris & Aurthur, 3 Nov. 2014. Web. 7 Nov. 2014.

About the Author:

My name is Matthew J. Rodgers and I am the President of iprospectcheck.com, a background screening company that specializes in fast, accurate, compliant and affordable screening solutions for employers. If you found this article useful or informative, please share it and subscribe to my blog. I am not a lawyer, so if you need specific legal advice please use appropriate counsel. The views expressed herein are solely my own.

You can reach out to me at matt@iprospectcheck.com, or by visiting our website at www.iprospectcheck.com to learn more.